2017 (6) TMI 275 - AT - Service Tax

Transportation of sugarcane - GTA service - Held that - it is admitted fact that for the transportation of sugarcane by truck and tractor owners, no consignment note was issued, therefore, the transportation service does not fall under the category of GTA. Accordingly service tax is not chargeable on such transportation. On identical case, the Tribunal has held that no service tax is chargeable on the sugar mills for transportation of sugarcane. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:

1. Whether the transportation of sugarcane by truck and tractor owners falls under the category of Goods Transport Agency (GTA) services.
2. Whether the appellants are liable to pay service tax on the transportation of sugarcane under GTA services.

Issue-wise Detailed Analysis:

1. Whether the transportation of sugarcane by truck and tractor owners falls under the category of Goods Transport Agency (GTA) services:

The appellants procured sugarcane from farmers and used truck and tractor services for transportation from the farm to the factory. The department contended that the appellants paid for GTA services but did not pay the corresponding service tax. The appellants argued that no consignment notes were issued by the truck and tractor owners, which is a vital condition for charging service tax under GTA services. They cited various Tribunal decisions to support their claim that without consignment notes, the service does not qualify as GTA.

The Tribunal found that it is an admitted fact that no consignment notes were issued for the transportation of sugarcane by truck and tractor owners. Therefore, the service does not fall under the category of GTA. This conclusion is supported by several Tribunal decisions, including Nandganj Sihori Sugar Co. Ltd. 2016 (42) STR 545, where it was held that without consignment notes, the transportation service is not covered by Section 65(105)(zzp) and thus, no service tax liability arises.

2. Whether the appellants are liable to pay service tax on the transportation of sugarcane under GTA services:

The department argued that the appellants, being a factory as prescribed under notification 35/2004-ST, are liable to pay service tax. However, the Tribunal referred to previous judgments where it was consistently held that in the absence of consignment notes, the transportation service does not qualify as GTA. For instance, in Nandganj Sihori Sugar Co. Ltd. 2014 (34) STR 850, the Tribunal emphasized that without consignment notes, the transporters cannot be considered a Goods Transport Agency, and thus, the service of transportation provided does not attract service tax.

Similarly, in Bhima SSK Ltd. 2016 (41) STR 438, it was reiterated that transportation by individual truck owners without consignment notes is merely simple transportation and not a service provided by a Goods Transport Agency. The Tribunal concluded that the transportation of sugarcane in this case does not fall under GTA services, and therefore, the appellants are not liable to pay service tax.

Conclusion:

The Tribunal, following its earlier decisions and the facts of the case, held that no service tax is chargeable on the sugar mills for the transportation of sugarcane. The demand of service tax under GTA confirmed by the original authority and upheld by the Commissioner was found unsustainable. Consequently, the impugned order was set aside, and the appeal was allowed.